As we head into 2022, there are concerns that bitcoin has an expiry date. And it’s fast approaching.
After the massive year bitcoin had in 2021 — up by a whopping 157 per cent by the year’s close — many investors have started thinking about what happens when the cryptocurrency runs out.
As a way to stop inflation and to keep the coin valuable, bitcoin’s mystery creator Satoshi Nakamoto placed a limit on the number of coins that can exist.
The number of bitcoins is capped at 21 million, meaning there will only ever be 21 million of the coins in circulation.
Bitcoin started out trading at about US$0.08 back in 2009 and now, as at time of writing, a single coin is worth US$46,000 (A$64,000).
In the 12 preceding years since bitcoin first launched, bitcoin’s value has risen by 33,978 per cent.
A total of 18.9 million coins have been mined, according to CoinMarketCap — nearly 90 per cent of the total supply.
Of those, 3.7 million have been lost into the abyss forever, either due to death, or losing access to the coins.
That means there’s just a little over two million coins left for eager traders to get their hands on.
But what happens when bitcoin runs out?
Current predictions indicate that by February 2140, bitcoin will run out.
While that seems a difficult number to stomach considering nearly 90 per cent of the supply has already been snapped up in such a short amount of time, there’s an explanation.
That’s because 83 per cent of all the available Bitcoin has already been released in just 12 years since its inception.
However, less and less Bitcoin is being released as time goes on.
By the early 2030s it’s expected 97 per cent of Bitcoin would be out in the market, but the last remaining three per cent will only be released across 110 years until 2140.
After that, there will be no new bitcoin and the only way to own the popular crypto from then on would be buying it from an existing investor rather than mining it.
On average, coins are eased into the bitcoin supply at an average rate of about one block every 10 minutes.
However, that will cease by 2140.
Every ten minutes, bitcoin miners solve a puzzle that allows them to add a newly discovered block to the overall blockchain, which is the mining process.
As an incentive for discovering the block and continuing to mine them in the future, the miner is given a fixed number of bitcoins for their work, called a “block reward.”
When bitcoin first launched, this reward was a whopping 50 bitcoins.
The reward halves for every 210,000 new blocks verified, which ends up being roughly every four years.
As the value of bitcoin goes up, the reward remains attractive to miners, even though it is reduced.
Over the past 12 years, this reward has been downgraded to 25 bitcoins, then 12.5 coins, and most recently 6.25 bitcoins.
The most recent halving occurred in May 2020 and the next reward reduction is expected to occur in 2024 at current rates.
Bitcoin’s algorithm means that the supply of newly mined bitcoin is kept constant no matter how many miners there are.
But experts predict the scarcity of bitcoin will drive up its price.
Plus, it will never fully run out, according to bitcoin enthusiasts, as there will always be someone willing to sell.